Economy, asked by pradhanjumunkumar, 5 months ago

Explain the concept of inflationary gap.explain the role of repo rate in reducing this gap

Answers

Answered by sdsachindisale999

1

Answer:

Role of Repo rate: Repo rate relates to the loans offered by the RBI to the commercial banks not without collateral. During inflation Repo rate is increased. As a follow-up action, the commercial banks rise the market rate of interest. This reduces the demand for credit and thus inflation can be combated.

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